BTCChina, one of China's largest bitcoin trading platforms, will stop registration of new users on Thursday due to the crackdown by regulators. Bitcoin lost a massive $1,000 in value since the beginning of September when its price was close to breaking a new record of $5,000.

The move is being as a response to the warning issued on Wednesday by China's National Internet Finance Association (which describes itself as a "national self-regulatory organisation") that cryptocurrencies are increasingly being used tofacilitate illegal fundraising and money laundering. The cost of the bitcoin declined to 26,400 Yuan (almost to $4,029) on BTC China this week compared to 32,500 Yuan of last week.

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This week, JP Morgan chief executive Jamie Dimon described bitcoin as "a fraud", saying it will "blow up". It added that the exchanges would be told to leave the market.

"The Chinese government might have felt that their softly-softly approach earlier in the year was too light touched and might be looking to make a sterner reproach this time", said Charles Hayter, CEO of CryptoCompare, a digital currency comparison website.

China's cryptocurrency exchanges have been instructed to halt their operations, multiple news outlets have reported.

As if the Bitcoin price has not retraced enough already, more volatility is erupting across all markets. However, the original cryptocurrency has somewhat recovered since then and is now trading at $3,441, down a mere 1.5% from the same time yesterday.